Cyprus won’t be able to recover from the blow it’ll suffer if agrees to all of the troika’s “unprecedented” bailout terms, Cypriot economy professor, Andreas Theophanous, said an exclusive interview with RT.

Cypriot president, Nicos Anastasiades, is holding talks with the
troika (EU, ECB, IMF) in the last attempt to secure €10 billion,
which will save the debt-hit Mediterranean island from
bankruptcy.

Under the latest plan, a one-time levy of 20 per cent would be
placed on uninsured deposits of more than €100,000 at the Bank of
Cyprus, with a separate tax of 4 per cent assessed on uninsured
deposits of more than €100,000 at all other banks in the
country.

A professor of Political Economy at the University of Nicosia and
the president of the Cyprus Center for European and International
Affairs, Andreas Theophanous, believes that the shock therapy
implemented by the EU in Cyprus is the wrong solution as it’ll only
worsen the economic situation in the country.

RT: A crucial meeting is underway in Brussels as the
president of Cyprus is discussing the crisis with the key figures
who hold the country's fate in their hands. What's your prognosis
of its outcome?

AT: It’s very difficult to make a forecast. There is a
political willingness by the government [of Cyprus] to reach an
agreement for the bailout with the Troika, but it seems that they
are making it more and more difficult with new and new demands. The
fear that exists is that in case that all demands of the troika are
accepted, it’ll be very difficult for this agreement to be viable
in the sense that it’ll throw the country into a huge fiscal cliff,
huge recession and a vicious circle. And it’ll be extremely
difficult if not impossible to get out of it.

RT: Cyprus is desperately trying to prevent business from
fleeing the country, even the Archbishop of Cyprus is reportedly
planning to hold talks with foreign investors. How destructive do
you predict the outflow of capital could be if the measures are
implemented?

AT: You see, what has happened lately was unprecedented.
When they announced the measures last week it led to a big panic. I
think the economic problems of Cyprus could be addressed with a
gradualist approach. These shock therapies create more problems
than they resolve. We think in Cyprus that there’s a huge
solidarity deficit in the European Union and in the Troika, which
is much higher than any fiscal deficit or public debt of any
country in the European south.

RT: Many people now face losing up to a fifth of their
life savings. How are banks planning to restore their customers'
trust after something so many view as outright robbery?

AT: This is unprecedented. Cyprus lost 25 per cent of its
GDP almost two years ago when it was the haircut of the Greek debt.
And there has been no compensation for that. If these ideas that
are being discussed are implemented – there would be another
haircut of Cyprus’ GDP, which will be around 40 per cent. It’ll be
impossible, I think, to get out of such a mess. I find it very
difficult for this to be viable. Even if there’s agreement, even if
it goes through the parliament, I find it extremely difficult for
this to be viable in the next few months to come.